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No fear of interest rate hikes, a strong rebound? Can't this wave of “bottom hunting” keep up? (Follow and comment to send 66 points)

On the night of the US interest rate hike, the market situation changed.

On the other side of the ocean, the “Chinese experts” swept away the haze and rebounded strongly.It also led to a sharp rise in US stocks after the opening of the market,$PDD Holdings (PDD.US)$At one point, it surged by 45%, and US tech giants such as $Apple (AAPL.US) $ and $Microsoft (MSFT.US) $It also rose in the intraday period and showed an upward trend。

Today or even this week,Is it a continuation of the upward trend? Or is it right after a pullback? Should investors take advantage of the rebound“Go to the bottom on the right and keep eating meat”?Should I adjust the formationTaking risks and welcoming interest rate hikes?

Let's start with interest rate hikes and see if we take risks or take risks?

1. Who will the interest rate hike affect? Also, who is it good for?

The Federal Reserve announced its monetary policy statement at 2 a.m.Also, at this meeting, the interest rate matrix and quarterly economic forecast were announced for the first time since December 2021.

Currently, the Federal Reserve has raised interest rates by 25 points as scheduled, in line with market expectations. Also, according to the bitmap, the number of interest rate hikes increased sharply to 7 in '22, and the “downsizing” will also be announced in May, and the pace has accelerated markedly.

What investors need to know is:The Federal Reserve raised interest ratesIt's a tight monetary policy，logicallyUnfavorable to the stock market.

Looking at historical dataSince the 80s of the last century, the Federal Reserve has experienced a total of 6 rounds of obvious interest rate hikes. The cycle of interest rate hikes by the Federal Reserve has the characteristics of being gradual and continuous, exceptEnd of 2018In addition to the fall in the stock market due to the excessive tightening of financial markets by the Federal Reserve,The reaction of US stocks during the rest of the interest rate hike cycle was generally positive.

Overall, the negative impact of interest rate hikes on the stock market is very limited, but as the interest rate hike cycle comes to an end, the stock market sometimes reacts negatively.

Since this year, technology stocks have been in sharp turmoil due to the prospect of an accelerated pace of interest rate hikes.

However, according to Strategas Securities,In the interest rate hike cycle over the past 30 yearsThe technology stock sector, including $Apple (AAPL.US) $, $Microsoft (MSFT.US) $, $Google-A (GOOGL.US) $, $Amazon (AMZN.US) $, $Nvidia (NVDA.US) $, etc.It is generally one of the best-performing sectors of the S&P 500 index, with an average annual increase of close to 21%.

However, under the interest rate hike cycle,Which sectors are more tasty?We might as well take a look at the views of major banks and historical data performance before operating.

regardingThe performance of other major asset classes such as US stocks, US bonds, and US dollars during the interest rate hike cycle, please click on the blue link to view>>>>>>Performance of major asset classes in the US interest rate hike cycle

2. Will this wave of bottlenecks keep up?

Obviously, a rate hike has already made the market feel tense,But before deciding whether to follow the trend and go to the bottom，We also need to pay attention to a short-term disruptor - “Four Witches Day”。

On the day of the Four Witches Day (this Friday)Expired options and futures contracts will be settled automatically.As a result, market trading volume has increased significantly, and market volatility has also increased，The impact of Sibu Day on the stock market is most obvious during the opening and closing periods of the day. This will provide arbitrators with a short-term opportunity to profit from temporary price fluctuations.For long-term investors, however, the impact of Four Witches Day is minimal.

Going back to the bottom, let's first take a look at what signals are on the K line for bottom reading.

2.1 Bottom detection signal

Divergence is a sign of bottoming out in the stock market, if the stock price(Indicating the K line) is fallingThe low points are one lower than the other, and the moving average is also arranged wave after wave downward, whileTechnical indicators (such as MACD or KDJ) are on the upwards side, that is, wave after wave, wave after wave, upward, high point is higher than one, so to speakThe divergence between the stock price and the indicator is called “bottom divergence.”

A divergence from the bottom usually occurs in the lower zone of the general market. Its appearance indicates a decline in the marketwillIt's over.

⚠️Note: This is just a case study and does not represent any investment opportunity.

Investors should be aware, however, that technical indicators often fail in the face of influential news.

To learn more technical indicators analysis and discover more investment opportunities, please click on the blue link >>>>>>Learn 21 powerful tools for technical analysis quickly

2.2 Correct bottom-digging posture

Do you actually look to the bottom or just wait and see?It is true that some people became famous in World War I by bravely scouting the bottom of World War I and accumulated huge wealth, but what we need to see even more clearly is,There is often a possibility that the reverse side of a bottom check is a huge risk.More people are stuck in the middle of the mountainside, experiencing misery and heartbreak.

Exactly how to read the bottom the bottom correctly?

Posture 1: Getting to the bottom becomes unsuccessful; the key lies in position allocation

In this rebound, investors' voices are mostly focused on three categories:

No money to go to the bottom? Are you afraid to enter the venue in the face of going to the bottom? Missed the bottom reading?Essentially, they all don't have a clear understanding of bottom reading, and they don't notice that bottom reading itself is the management of position allocation.

The success or failure of an investment actually depends on how aware we are of risk, we must always be clear,Every time you go to the bottom, you face not only an opportunity, but most likely a huge risk.

Therefore, getting to the bottom is an opportunistic operation and is an offensive situation. However, there are 3 types of asset allocation combinations that are most common. According to the degree of volatility from low to high, the balanced formation is 4:4:2 formation, the defensive formation is 1:4:5, and the offensive formation is 3:4:4,The percentage of most attacks also usually does not exceed 30% of the total asset position.

If you face scattering without bullets, then explainIn the past, all positions were used on high-profit and high-risk offensive targets.

If you don't dare to enter in the face of going through the bottom and miss it, thenYou should think about whether the positions you intend to invest are too heavy, causing you to think that the risks outweigh the opportunities.

Once we strictly abide by reasonable asset allocation and dynamically adjust our asset allocation within a reasonable range,So whether we face risks or opportunities, we can be more relaxed rather than worrying too much about missing out on eating meat or being stuck in the middle of a mountainside.

Posture 2: Vague correctness is far greater than precise error.

In investing, we all want to buy at the lowest point and sell at the highest point to get the most profit. However,The perfect time to trade is only known in the past. Only when all the dust settles can we see clearly where the bottom is and where the top is.

In his letter to shareholders, Buffett once said, “Vague correctness is far better than precise error.” When making investment decisions, it is impossible to predict the best time,It's good to make decisions within the right range，There's no need to get bogged down in a specific price.No one can accurately judge the bottom of the market; even top investment gurus such as Buffett and Munger will stick to the bottom in the middle of the mountainside.

Take the bottom line during the 2008 financial crisis as an example. In September of that year, Buffett purchased 5 billion US dollars of Goldman Sachs permanent preferred stock, and the convertible price of its common stock was 115 US dollars. After that, Goldman Sachs's stock price plummeted 55% for a while, and the voices of the stock market were riddled in the major media, but Buffett himself did not agree.By March 2013, the investment had netted Buffett $3.1 billion.

Posture 3: Ladder Buying

To get to the bottom, you must buy in batches, which is also known as the stepped purchasing method,For example, buy one batch for every 10% drop.(This is how Duan Yongping copied the bottom of Tencent)Before going to the bottom, you need to calculate how many times you can buy the money you use to go to the bottom if it keeps falling.

Posture 4: Don't use leverage to get to the bottom

On October 29, 1929, the Dow Jones Index plummeted 12%. This day was the most famous “Black Tuesday” in history. In November 1929, the Dow Jones index fell to a low of 198 points, then rebounded steadily.

Many investors think the worst is over and the stock market is about to reverse. Graham also began entering the field to investigate the bottom. All he copied were good stocks that were very cheap in terms of value evaluation. In order to obtain a greater yield, he also used margin to carry out leveraged operations. However, the stock market continued to rebound until April and then began to plummet again. By July 1932, funds managed by Graham had lost as much as 78% of their output. Graham comes laterSummarize a basic principle of eternal value investment: margin of safety. Safety first, profit second, don't use leverage to go to the bottom。

Finally, Finance Academy wishes everyone the chance to eat meat before their next chance.

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